Two-thirds of financial services practitioners believe that the 50p top rate of income tax is damaging the UK, a Chartered Institute for Securities & Investment (CISI) survey shows. A widespread concern of respondents was that the UK faces a drain of talent to countries with a lower tax rate.
One said: “Businesses are relocating and offering high-flyers mouth-watering incentives to follow. The Far East region is welcoming such businesses, so their gain is our loss.”
Others argued that the tax levy on those earning over £150,000 a year is a disincentive to wealth creation and does little to boost the Treasury’s coffers. “It changes one’s focus from maximising earnings to maximising tax efficiency. End result, lower earning, lower taxes, weaker economy,” said a contributor. A ‘red flag’ to growth was a further view.
Another contributor said: “I don’t accept that higher earners, who in general use few social services, fund their own pension, often pay for health insurance and are entitled to few benefits should they lose their job, are expected to increase their subsidy of society above the long-established 40% level.”
Among the 34% of respondents in favour of the 50p tax rate, there was a belief that those who earn more should give more at a time of economic struggle. “The higher earners can easily afford to pay more tax, leaving the lower earners to pay less,” said one supporter.
Another argument was that “it’s a reasonable rate but the threshold should be higher and maybe vary according to each region in the UK.”
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